Why Some Investors Still Choose YieldMax Covered Call ETFs—Despite the Risks

This article is not an attempt to defend YieldMax covered call ETFs. Their structural weaknesses are well known, and I have written about them extensively. Rather, this is an explanation of why some investors—including myself—still choose to use them, despite fully understanding those risks.

The answer is not yield. It is not optimism. And it is certainly not long-term growth expectations.

First, Let’s Be Honest About the Downsides

YieldMax covered call ETFs come with clear and unavoidable limitations:

• Upside participation is capped during strong bull markets
• NAV erosion is common over long holding periods
• Return of Capital (ROC) often appears in distributions
• Total return frequently underperforms the underlying asset

These are not misunderstandings. They are structural characteristics. Ignoring them is what causes problems—not the products themselves.

Why I Still Use YieldMax ETFs

My strategy is simple: I trade short-term price movement and use distributions as a secondary component.

I am not a long-term yield compounding investor. I combine short-term trades and swing positions with income. Yield, in this context, is not a promise of safety—it is a tool to offset waiting.

What Changed After Witching Day

After witching day, I sold my TSLY position at roughly a 5% gain without losing principal. At the time, my mind was constantly torn between price action and upcoming distributions.

I realized that the stress of holding purely for dividends was outweighing the benefit. I did not want to keep fighting with the idea of “one more distribution” while watching price move against me.

That experience changed how I approach these products.

How I Actually Trade YieldMax ETFs Now

Since then, I prefer a simple timing framework:

• I sell before the ex-dividend date
• I look to re-enter when price pulls back
• I accept that not every order will be filled

If you look at the charts, most YieldMax ETFs move along a fairly predictable price channel. This is not advanced technical analysis—it is something even beginners can recognize.

The difference is not knowledge, but constraints. I do not spend my entire day watching markets. I have other work to do.

So I place orders at prices I am comfortable with and move on. Sometimes they execute. Sometimes they don’t. That is acceptable.

The Rule That Matters More Than Any Yield

Over time, one rule has replaced all others:

If price rises, I sell. If price falls, I buy.

This is not an optimized system. It is a stress-reduction rule.

YieldMax ETFs work for me only because I treat them as trading instruments with income, not income instruments meant to be held indefinitely.

When YieldMax Becomes Dangerous

These ETFs fail investors when they are treated as:

• Core long-term holdings
• Growth substitutes
• Dividend shields against price risk

Expecting YieldMax products to behave like traditional investments is where most losses begin.

Final Thoughts

YieldMax covered call ETFs are not wrong. Misusing them is.

For investors who combine swing trading with income, these products can serve a narrow but practical purpose. Outside of that context, their risks quickly outweigh their appeal.

Understanding how—and why—you are using them matters far more than the yield printed on the screen.